/Crypto Regulations Rock the Markets, Waves and Stellar Resist Liquidation

Crypto Regulations Rock the Markets, Waves and Stellar Resist Liquidation

The article discusses the upcoming US and EU cryptocurrency regulations, Travel Rule ,Bitcoin, Monero and Waves. The scenario of sanctioning cryptocurrencies in Russia is also discussed.

Both the United Stated and EU are weighing the possibility of sanctioning Russia from the use of cryptocurrencies. Reports indicate that US President Biden will sign an executive order this week, paving the way for the enforcement of such sanctions.

The EU Parliament is scheduled to vote on the European Union’s Markets in Crypto Assets (MiCA) regulations on 14 March 2022. It will also include some measures on stablecoins.

EU Crypto Sanctions

The EU also clarified today that crypto assets are included in the sanctions imposed on Russia:

“Crypto assets fall under the scope of ‘transferable securities’ and further expand the existing financial restrictions by mirroring the measures already in place regarding Russia sanctions.”

eu crypto sanctions

source: EU

Crypto exchanges have already taken some measures to prepare for the direct cryptocurrency sanctions on Russia and to meet future cryptocurrency regulations.

In February, large cryptocurrency exchange has teamed up to launch the Travel Rule Universal Solution Technology (TRUST).

The goal of TRUST is to assure full compliance with the Financial Action Task Force (FATF). One of the key components of FATF is to lower crypto usage for money laundering and financing terrorism.

18 crypto exchanges have joined TRUST. Some of these known companies are Coinbase, Robinhood, Gemini, Kraken and BlockFi.

FATF Cryptocurrency Rules

The FATF requires records of transaction from above $1,000 / €1,000. Regarding ATMS, some jurisdictions may view such transaction to be occasional while others may not.

When assessing which countries are at greater risk, FATF suggests the following using credits to determine the risk:

“Countries or geographic areas identified by credible sources as providing funding or support for terrorist activities or that have designated terrorist organizations operating within them.

“Countries identified by credible sources as having significant levels of organized crime, corruption, or other criminal activity, including source or transit countries for illegal drugs, human trafficking, smuggling, and illegal gambling.

“Countries that are subject to sanctions, embargoes, or similar measures issued by international organizations such as the United Nations.

“Countries identified by credible sources as having weak governance, law enforcement, and regulatory regimes, including countries identified by the FATF statements as having weak AML/CFT regimes, especially for VASPs, and for which VASPs and other obliged entities should give special attention to business relationships and transactions.

“In identifying the addresses, the FATF suggests the following measures:

“Corroborating the identity information received from the customer, such as a national identity number, with information in third-party databases or other reliable sources.

“Potentially tracing the customer’s IP address.

“The use of analysis products, such as blockchain analytics

“Searching the Internet for corroborating activity information consistent with the customer’s transaction profile, provided that the data collection is in line with national privacy legislation.”

The FATF recommends keeping records for at least 5 years.

Source: FATF

FinCen Crypto Rules

The Financial Crimes Enforcement Network (FinCen) requires the following information available if requested from exchanges:

The name of the transmitter,
The account number of the transmitter, if used,
The address of the transmitter,
The identity of the transmitter’s financial institution,
The amount of the transmittal order,
The execution date of the transmittal order, and
The identity of the recipient’s financial institution;

and, if received:

The name of the recipient,
The address of the recipient,
The account number of the recipient, and
Any other specific identifier of the recipient.

Source: FinCen

According to FinCen, records all the transactions must be kept for 5 years. The Travel rule only applies to transactions that exceed $3,000 (or foreign equivalent). The interesting part is that transactions that made via ATMs or point of sale are exempted from the rule.

In February, Assita Kanko and Ernest Urtasun submitted a draft to mandate all cryptocurrency exchange to record all transactions. This includes transactions as little as $5.

Recently, FinCen issued an alert to US institutions on possible attempts Russia may exercise to evade the sanctions.

fincen

source: FinCen

Preparing for Cryptocurrency Sanctions

Tracking users’ IP addresses is a common practice. IP screening is required to ensure sanctions jurisdictions are unable to make transactions at the exchange.

BitGo was fined by the Office of Foreign Assets Control (OFAC) in 2020 for allowing users in sanctioned regions to make transactions at the exchange.

A total of 183 transactions were made from users in Sudan, Syria, Cuba, Iran and Crimea using BitGo’s hot wallets.

bitgo

source: the department of the treasury

There are services that offer screening in real time with the updated sanctions list. In an event measures are taken against  cryptocurrencies 
Cryptocurrencies

By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the networks which are used to authenticate blockchain technology. Cryptocurrencies can be thought of as systems that accept online payments which are denoted as “tokens.” Tokens are represented as internal ledger entries in blockchain technology while the term crypto is used to depict cryptographic methods and encryption algorithms such as public-private key pairs, various hashing functions, and an elliptical curve. Every cryptocurrency transaction that occurs is logged in a web-based ledger with blockchain technology.These then must be approved by a disparate network of individual nodes (computers that maintain a copy of the ledger). For every new block generated, the block must first be authenticated and confirmed ‘approved’ by each node, which makes forging the transactional history of cryptocurrencies nearly impossible. The World’s First CryptoBitcoin became the first blockchain-based cryptocurrency and to this day is still the most demanded cryptocurrency and the most valued. Bitcoin still contributes the majority of the overall cryptocurrency market volume, though several other cryptos have grown in popularity in recent years.Indeed, out of the wake of Bitcoin, iterations of Bitcoin became prevalent which resulted in a multitude of newly created or cloned cryptocurrencies. Contending cryptocurrencies that emerged after Bitcoin’s success is referred to as ‘altcoins’ and they refer to cryptocurrencies such as Bitcoin, Peercoin, Namecoin, Ethereum, Ripple, Stellar, and Dash. Cryptocurrencies promise a wide range of technological innovations that have yet to be structured into being. Simplified payments between two parties without the need for a middle man is one aspect while leveraging blockchain technology to minimize transaction and processing fees for banks is another. Of course, cryptocurrencies have their disadvantages too. This includes issues of tax evasion, money laundering, and other illicit online activities where anonymity is a dire ingredient in solicitous and fraudulent activities.

By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the networks which are used to authenticate blockchain technology. Cryptocurrencies can be thought of as systems that accept online payments which are denoted as “tokens.” Tokens are represented as internal ledger entries in blockchain technology while the term crypto is used to depict cryptographic methods and encryption algorithms such as public-private key pairs, various hashing functions, and an elliptical curve. Every cryptocurrency transaction that occurs is logged in a web-based ledger with blockchain technology.These then must be approved by a disparate network of individual nodes (computers that maintain a copy of the ledger). For every new block generated, the block must first be authenticated and confirmed ‘approved’ by each node, which makes forging the transactional history of cryptocurrencies nearly impossible. The World’s First CryptoBitcoin became the first blockchain-based cryptocurrency and to this day is still the most demanded cryptocurrency and the most valued. Bitcoin still contributes the majority of the overall cryptocurrency market volume, though several other cryptos have grown in popularity in recent years.Indeed, out of the wake of Bitcoin, iterations of Bitcoin became prevalent which resulted in a multitude of newly created or cloned cryptocurrencies. Contending cryptocurrencies that emerged after Bitcoin’s success is referred to as ‘altcoins’ and they refer to cryptocurrencies such as Bitcoin, Peercoin, Namecoin, Ethereum, Ripple, Stellar, and Dash. Cryptocurrencies promise a wide range of technological innovations that have yet to be structured into being. Simplified payments between two parties without the need for a middle man is one aspect while leveraging blockchain technology to minimize transaction and processing fees for banks is another. Of course, cryptocurrencies have their disadvantages too. This includes issues of tax evasion, money laundering, and other illicit online activities where anonymity is a dire ingredient in solicitous and fraudulent activities.
Read this Term
in Russia, VPNs may be required to be blocked as well.

Know Your Customer (KYC) is already adopted by the leading exchanges. It is a known Anti Money Laundering (AML) process. It requires identification verification and ongoing monitoring of client’s transactions in search for irregular patterns.

Elliptic for example offers blockchain analytics to financial firms.

If sanctions violation is noted by the exchange, it must be reported to the regulatory bodies.

Evading Sanctions, the ‘Loopholes’

MetaMask, a popular wallet for cryptocurrencies blocked Venezuela users by error. MetaMask is using Ethereum node infura, which is owned by a US company (ConenSys).

To meet the US sanctions list infura blocked Venezuela by error. In an event the United Stated sanctions cryptocurrencies in Russia, Infura is likely to block Russian users. Russian users will therefore be unable to use their MetaMask crypto wallets.

There may be a rush towards hardware wallets such as Trezor.

One method of evading sanctions is turning to Bitcoin mining. The system is unable to block miners from receiving BTC rewards based on geographic location. Turning to real estate in metaverse may also be a possibility to safeguard one’s capital.

While the value of the virtual real estate depends on the market, despite the reduced interest in real estate NFTs the market is expected to blossom within the next several years.

Taking a loan against NFTs may also be possible as the direct focus is on crypto exchanges and not NFTs ‘pawn shops.’ Renting NFTs may also be possible if a wrapped version of the digital asset is created.

For the Russian government/banks to bypass the sanctions is challenging. In 2018 reports circulated that Russian officials and businessmen are involved with Venezuela’s official cryptocurrency, Petro.

It is possible Russia will follow suit and introduce its own coin and blockchain to fight the sanctions.

The Monetary Authority of Singapore (MAS) recently announced it is forbidding cryptocurrencies and NFTs transactions sanctioned Russian banks and individuals.

See full statement

Monero is Hammered by the Market

Some cryptocurrencies are privacy focused. Monero (XMR) is among these popular coins. As opposed to traditional cryptos such as ether and  Bitcoin 
Bitcoin

Bitcoin is the world’s first digital currency that was created in 2009 by a mysterious entity named Satoshi Nakamoto. As a digital currency or cryptocurrency, Bitcoin operates without a central bank or single administrator. Instead, Bitcoin can be sent via a Peer-to-Peer (P2P) networking, devoid of intermediaries.Bitcoins are not issued or backed by any governments or banks, and Bitcoin is not considered to be legal tender, although they do have status as an acknowledged transfer of value in some jurisdictions. Rather than composing a physical currency, Bitcoins are pieces of code that can be sent and received across a kind of distributed ledger network called a blockchain. Transactions on the Bitcoin network are confirmed by a network of computers (or nodes) that solve a series of complex equations. This process is called mining. In exchange for mining, the computers receive rewards in the form of new Bitcoins. Mining grows increasingly difficult over time, and the rewards get smaller and smaller. There is a total of 21 million Bitcoins. As of May 2020, there are 18.3 million Bitcoins in circulation. This number changes approximately every 10 minutes when new blocks are mined. Presently, each new block adds 12.5 bitcoins into circulation.Since its inception, Bitcoin has remained the most popular and largest cryptocurrency in terms of market cap in the world. Bitcoin’s popularity has contributed significantly to the release of thousands of other cryptocurrencies, called “altcoins.” While the crypto market was originally hegemonic, today’s landscape features countless altcoins.Bitcoin ControversyBitcoin has been extremely controversial since its original launch. Given its mercurial nature, Bitcoin has been criticized for its use in illegal transactions and money laundering.As its impossible to trace, these attributes make Bitcoin the ideal vehicle for illicit behavior. Moreover, critics point to its high electricity consumption for mining, rampant price volatility, and thefts from exchanges. Bitcoin has been seen as a speculative bubble given its lack of oversight. The crypto has weathered multiple collapses and survived over a decade so far. Unlike its launch back in 2009, Bitcoin today is viewed far differently and is much more accepted by merchants and other entities.

Bitcoin is the world’s first digital currency that was created in 2009 by a mysterious entity named Satoshi Nakamoto. As a digital currency or cryptocurrency, Bitcoin operates without a central bank or single administrator. Instead, Bitcoin can be sent via a Peer-to-Peer (P2P) networking, devoid of intermediaries.Bitcoins are not issued or backed by any governments or banks, and Bitcoin is not considered to be legal tender, although they do have status as an acknowledged transfer of value in some jurisdictions. Rather than composing a physical currency, Bitcoins are pieces of code that can be sent and received across a kind of distributed ledger network called a blockchain. Transactions on the Bitcoin network are confirmed by a network of computers (or nodes) that solve a series of complex equations. This process is called mining. In exchange for mining, the computers receive rewards in the form of new Bitcoins. Mining grows increasingly difficult over time, and the rewards get smaller and smaller. There is a total of 21 million Bitcoins. As of May 2020, there are 18.3 million Bitcoins in circulation. This number changes approximately every 10 minutes when new blocks are mined. Presently, each new block adds 12.5 bitcoins into circulation.Since its inception, Bitcoin has remained the most popular and largest cryptocurrency in terms of market cap in the world. Bitcoin’s popularity has contributed significantly to the release of thousands of other cryptocurrencies, called “altcoins.” While the crypto market was originally hegemonic, today’s landscape features countless altcoins.Bitcoin ControversyBitcoin has been extremely controversial since its original launch. Given its mercurial nature, Bitcoin has been criticized for its use in illegal transactions and money laundering.As its impossible to trace, these attributes make Bitcoin the ideal vehicle for illicit behavior. Moreover, critics point to its high electricity consumption for mining, rampant price volatility, and thefts from exchanges. Bitcoin has been seen as a speculative bubble given its lack of oversight. The crypto has weathered multiple collapses and survived over a decade so far. Unlike its launch back in 2009, Bitcoin today is viewed far differently and is much more accepted by merchants and other entities.
Read this Term
, Monero obfuscates any information about the users’ identity and past transactions.

The IRS hired Chainalysis and Integra to develop tracing tools for Monero. To this date no tracing tools for Monero were reported.

Aside Monero, other privacy-focused cryptocurrencies are available such as Zcash. Monero uses stealth addresses, random addresses that are burned after a single transaction (a burner address) and a security ring for greater privacy.

Monero’s official twitter account responded to the upcoming US executive order:

monero

As Monero is not compliant with the proposed regulations (and it will never be), Monero may be delisted from various exchanges. Many are suggesting to immediately withdraw XMR from crypto exchanges and store them in XMR wallets.

Privacy coins may be the center of attention in US regulations. Ransomware attackers often ask for Monero. Due to the upcoming regulations, privacy coins spiked higher. XMR popularity may increase as many users wish to maintain their anonymity in the crypto landscape.

Monero initially broke higher on when the US executive order was signed. However, it is currently facing a large selloff. Monero trading volumes are estimated to be down by approximately -40%.

It is early to determine whether XMR selling is related to profit realization or investors abandoning to the cryptocurrency due to the upcoming regulations.

Zcash, another privacy-focused token is holding onto its gains as opposed to XMR. It may offer a greater case for investors pulling out of Monero rather than a swift profit realization.

Bitcoin Reaction to Upcoming Regulations

Bitcoin initially traded higher following the executive order. One the dust settled; corrective weakness was followed.

Bitcoin investors realized profits following the rally, which is well seen in the market as BTCUSD is back under $40,000.

btc liquidation

source: coinglass

Aside Bitcoin, ETH gas fees dropped significantly. The standard (26) swapping gas fees dropped below $10. Liquidity gas for ether is also relatively low.

ETH Gas is Falling

Since the OpenSea phishing hack trading volumes in the NFT marketplace dropped significantly. OpenSea began blocking users that are based in Iran from its platform. The move started as regulating digital assets is picking up pace in both the United States and Europe.

It is possible that due the decline in ETH marketplaces it had some impact on the reduction of gas fees.

eth gas fees

swapping fee, source: crypto.com

eth liquidity gas

liquidity fee, source: crypto.com

Bitcoin, Waves and Stellar

As long as the war between Russia and Ukraine continues Bitcoin may struggle to find stability. A monthly close below $37,000 may technically suggest further weakness is due.

Regulatory measures that may be introduced by the US, EU and most recently Dubai may not necessarily have a positive impact on cryptocurrencies over the medium term.

‘Harsh’ regulations may be met by resistance and greater volatility in crypto-related products.

Stellar and Waves cryptocurrencies have their own blockchain. Despite the heavy selling in Bitcoin, Ethereum and BNB they are both demonstrating greater resilience.

waves

source: WAVE/USD, tradingview

I will cautiously say that using an alternative blockchains to BSC and ETH and the protocols differentials may have their benefits based on the market reaction to BTC long liquidations.

Waves did gain some attraction on its shift to Practical Proof-of-Stake Sharding (PPOSS) and support Ethereum Virtual Machine (EVM). While some suggest that the bullish ‘wave’ is because the founder is Ukrainian (Sasha Ivanov)

Analyzing the various blockchain technologies may provide a better understanding of which blockchain technology is best adopted and more resilient to market volatility.

The article discusses the upcoming US and EU cryptocurrency regulations, Travel Rule ,Bitcoin, Monero and Waves. The scenario of sanctioning cryptocurrencies in Russia is also discussed.

Both the United Stated and EU are weighing the possibility of sanctioning Russia from the use of cryptocurrencies. Reports indicate that US President Biden will sign an executive order this week, paving the way for the enforcement of such sanctions.

The EU Parliament is scheduled to vote on the European Union’s Markets in Crypto Assets (MiCA) regulations on 14 March 2022. It will also include some measures on stablecoins.

EU Crypto Sanctions

The EU also clarified today that crypto assets are included in the sanctions imposed on Russia:

“Crypto assets fall under the scope of ‘transferable securities’ and further expand the existing financial restrictions by mirroring the measures already in place regarding Russia sanctions.”

eu crypto sanctions

source: EU

Crypto exchanges have already taken some measures to prepare for the direct cryptocurrency sanctions on Russia and to meet future cryptocurrency regulations.

In February, large cryptocurrency exchange has teamed up to launch the Travel Rule Universal Solution Technology (TRUST).

The goal of TRUST is to assure full compliance with the Financial Action Task Force (FATF). One of the key components of FATF is to lower crypto usage for money laundering and financing terrorism.

18 crypto exchanges have joined TRUST. Some of these known companies are Coinbase, Robinhood, Gemini, Kraken and BlockFi.

FATF Cryptocurrency Rules

The FATF requires records of transaction from above $1,000 / €1,000. Regarding ATMS, some jurisdictions may view such transaction to be occasional while others may not.

When assessing which countries are at greater risk, FATF suggests the following using credits to determine the risk:

“Countries or geographic areas identified by credible sources as providing funding or support for terrorist activities or that have designated terrorist organizations operating within them.

“Countries identified by credible sources as having significant levels of organized crime, corruption, or other criminal activity, including source or transit countries for illegal drugs, human trafficking, smuggling, and illegal gambling.

“Countries that are subject to sanctions, embargoes, or similar measures issued by international organizations such as the United Nations.

“Countries identified by credible sources as having weak governance, law enforcement, and regulatory regimes, including countries identified by the FATF statements as having weak AML/CFT regimes, especially for VASPs, and for which VASPs and other obliged entities should give special attention to business relationships and transactions.

“In identifying the addresses, the FATF suggests the following measures:

“Corroborating the identity information received from the customer, such as a national identity number, with information in third-party databases or other reliable sources.

“Potentially tracing the customer’s IP address.

“The use of analysis products, such as blockchain analytics

“Searching the Internet for corroborating activity information consistent with the customer’s transaction profile, provided that the data collection is in line with national privacy legislation.”

The FATF recommends keeping records for at least 5 years.

Source: FATF

FinCen Crypto Rules

The Financial Crimes Enforcement Network (FinCen) requires the following information available if requested from exchanges:

The name of the transmitter,
The account number of the transmitter, if used,
The address of the transmitter,
The identity of the transmitter’s financial institution,
The amount of the transmittal order,
The execution date of the transmittal order, and
The identity of the recipient’s financial institution;

and, if received:

The name of the recipient,
The address of the recipient,
The account number of the recipient, and
Any other specific identifier of the recipient.

Source: FinCen

According to FinCen, records all the transactions must be kept for 5 years. The Travel rule only applies to transactions that exceed $3,000 (or foreign equivalent). The interesting part is that transactions that made via ATMs or point of sale are exempted from the rule.

In February, Assita Kanko and Ernest Urtasun submitted a draft to mandate all cryptocurrency exchange to record all transactions. This includes transactions as little as $5.

Recently, FinCen issued an alert to US institutions on possible attempts Russia may exercise to evade the sanctions.

fincen

source: FinCen

Preparing for Cryptocurrency Sanctions

Tracking users’ IP addresses is a common practice. IP screening is required to ensure sanctions jurisdictions are unable to make transactions at the exchange.

BitGo was fined by the Office of Foreign Assets Control (OFAC) in 2020 for allowing users in sanctioned regions to make transactions at the exchange.

A total of 183 transactions were made from users in Sudan, Syria, Cuba, Iran and Crimea using BitGo’s hot wallets.

bitgo

source: the department of the treasury

There are services that offer screening in real time with the updated sanctions list. In an event measures are taken against  cryptocurrencies 
Cryptocurrencies

By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the networks which are used to authenticate blockchain technology. Cryptocurrencies can be thought of as systems that accept online payments which are denoted as “tokens.” Tokens are represented as internal ledger entries in blockchain technology while the term crypto is used to depict cryptographic methods and encryption algorithms such as public-private key pairs, various hashing functions, and an elliptical curve. Every cryptocurrency transaction that occurs is logged in a web-based ledger with blockchain technology.These then must be approved by a disparate network of individual nodes (computers that maintain a copy of the ledger). For every new block generated, the block must first be authenticated and confirmed ‘approved’ by each node, which makes forging the transactional history of cryptocurrencies nearly impossible. The World’s First CryptoBitcoin became the first blockchain-based cryptocurrency and to this day is still the most demanded cryptocurrency and the most valued. Bitcoin still contributes the majority of the overall cryptocurrency market volume, though several other cryptos have grown in popularity in recent years.Indeed, out of the wake of Bitcoin, iterations of Bitcoin became prevalent which resulted in a multitude of newly created or cloned cryptocurrencies. Contending cryptocurrencies that emerged after Bitcoin’s success is referred to as ‘altcoins’ and they refer to cryptocurrencies such as Bitcoin, Peercoin, Namecoin, Ethereum, Ripple, Stellar, and Dash. Cryptocurrencies promise a wide range of technological innovations that have yet to be structured into being. Simplified payments between two parties without the need for a middle man is one aspect while leveraging blockchain technology to minimize transaction and processing fees for banks is another. Of course, cryptocurrencies have their disadvantages too. This includes issues of tax evasion, money laundering, and other illicit online activities where anonymity is a dire ingredient in solicitous and fraudulent activities.

By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the networks which are used to authenticate blockchain technology. Cryptocurrencies can be thought of as systems that accept online payments which are denoted as “tokens.” Tokens are represented as internal ledger entries in blockchain technology while the term crypto is used to depict cryptographic methods and encryption algorithms such as public-private key pairs, various hashing functions, and an elliptical curve. Every cryptocurrency transaction that occurs is logged in a web-based ledger with blockchain technology.These then must be approved by a disparate network of individual nodes (computers that maintain a copy of the ledger). For every new block generated, the block must first be authenticated and confirmed ‘approved’ by each node, which makes forging the transactional history of cryptocurrencies nearly impossible. The World’s First CryptoBitcoin became the first blockchain-based cryptocurrency and to this day is still the most demanded cryptocurrency and the most valued. Bitcoin still contributes the majority of the overall cryptocurrency market volume, though several other cryptos have grown in popularity in recent years.Indeed, out of the wake of Bitcoin, iterations of Bitcoin became prevalent which resulted in a multitude of newly created or cloned cryptocurrencies. Contending cryptocurrencies that emerged after Bitcoin’s success is referred to as ‘altcoins’ and they refer to cryptocurrencies such as Bitcoin, Peercoin, Namecoin, Ethereum, Ripple, Stellar, and Dash. Cryptocurrencies promise a wide range of technological innovations that have yet to be structured into being. Simplified payments between two parties without the need for a middle man is one aspect while leveraging blockchain technology to minimize transaction and processing fees for banks is another. Of course, cryptocurrencies have their disadvantages too. This includes issues of tax evasion, money laundering, and other illicit online activities where anonymity is a dire ingredient in solicitous and fraudulent activities.
Read this Term
in Russia, VPNs may be required to be blocked as well.

Know Your Customer (KYC) is already adopted by the leading exchanges. It is a known Anti Money Laundering (AML) process. It requires identification verification and ongoing monitoring of client’s transactions in search for irregular patterns.

Elliptic for example offers blockchain analytics to financial firms.

If sanctions violation is noted by the exchange, it must be reported to the regulatory bodies.

Evading Sanctions, the ‘Loopholes’

MetaMask, a popular wallet for cryptocurrencies blocked Venezuela users by error. MetaMask is using Ethereum node infura, which is owned by a US company (ConenSys).

To meet the US sanctions list infura blocked Venezuela by error. In an event the United Stated sanctions cryptocurrencies in Russia, Infura is likely to block Russian users. Russian users will therefore be unable to use their MetaMask crypto wallets.

There may be a rush towards hardware wallets such as Trezor.

One method of evading sanctions is turning to Bitcoin mining. The system is unable to block miners from receiving BTC rewards based on geographic location. Turning to real estate in metaverse may also be a possibility to safeguard one’s capital.

While the value of the virtual real estate depends on the market, despite the reduced interest in real estate NFTs the market is expected to blossom within the next several years.

Taking a loan against NFTs may also be possible as the direct focus is on crypto exchanges and not NFTs ‘pawn shops.’ Renting NFTs may also be possible if a wrapped version of the digital asset is created.

For the Russian government/banks to bypass the sanctions is challenging. In 2018 reports circulated that Russian officials and businessmen are involved with Venezuela’s official cryptocurrency, Petro.

It is possible Russia will follow suit and introduce its own coin and blockchain to fight the sanctions.

The Monetary Authority of Singapore (MAS) recently announced it is forbidding cryptocurrencies and NFTs transactions sanctioned Russian banks and individuals.

See full statement

Monero is Hammered by the Market

Some cryptocurrencies are privacy focused. Monero (XMR) is among these popular coins. As opposed to traditional cryptos such as ether and  Bitcoin 
Bitcoin

Bitcoin is the world’s first digital currency that was created in 2009 by a mysterious entity named Satoshi Nakamoto. As a digital currency or cryptocurrency, Bitcoin operates without a central bank or single administrator. Instead, Bitcoin can be sent via a Peer-to-Peer (P2P) networking, devoid of intermediaries.Bitcoins are not issued or backed by any governments or banks, and Bitcoin is not considered to be legal tender, although they do have status as an acknowledged transfer of value in some jurisdictions. Rather than composing a physical currency, Bitcoins are pieces of code that can be sent and received across a kind of distributed ledger network called a blockchain. Transactions on the Bitcoin network are confirmed by a network of computers (or nodes) that solve a series of complex equations. This process is called mining. In exchange for mining, the computers receive rewards in the form of new Bitcoins. Mining grows increasingly difficult over time, and the rewards get smaller and smaller. There is a total of 21 million Bitcoins. As of May 2020, there are 18.3 million Bitcoins in circulation. This number changes approximately every 10 minutes when new blocks are mined. Presently, each new block adds 12.5 bitcoins into circulation.Since its inception, Bitcoin has remained the most popular and largest cryptocurrency in terms of market cap in the world. Bitcoin’s popularity has contributed significantly to the release of thousands of other cryptocurrencies, called “altcoins.” While the crypto market was originally hegemonic, today’s landscape features countless altcoins.Bitcoin ControversyBitcoin has been extremely controversial since its original launch. Given its mercurial nature, Bitcoin has been criticized for its use in illegal transactions and money laundering.As its impossible to trace, these attributes make Bitcoin the ideal vehicle for illicit behavior. Moreover, critics point to its high electricity consumption for mining, rampant price volatility, and thefts from exchanges. Bitcoin has been seen as a speculative bubble given its lack of oversight. The crypto has weathered multiple collapses and survived over a decade so far. Unlike its launch back in 2009, Bitcoin today is viewed far differently and is much more accepted by merchants and other entities.

Bitcoin is the world’s first digital currency that was created in 2009 by a mysterious entity named Satoshi Nakamoto. As a digital currency or cryptocurrency, Bitcoin operates without a central bank or single administrator. Instead, Bitcoin can be sent via a Peer-to-Peer (P2P) networking, devoid of intermediaries.Bitcoins are not issued or backed by any governments or banks, and Bitcoin is not considered to be legal tender, although they do have status as an acknowledged transfer of value in some jurisdictions. Rather than composing a physical currency, Bitcoins are pieces of code that can be sent and received across a kind of distributed ledger network called a blockchain. Transactions on the Bitcoin network are confirmed by a network of computers (or nodes) that solve a series of complex equations. This process is called mining. In exchange for mining, the computers receive rewards in the form of new Bitcoins. Mining grows increasingly difficult over time, and the rewards get smaller and smaller. There is a total of 21 million Bitcoins. As of May 2020, there are 18.3 million Bitcoins in circulation. This number changes approximately every 10 minutes when new blocks are mined. Presently, each new block adds 12.5 bitcoins into circulation.Since its inception, Bitcoin has remained the most popular and largest cryptocurrency in terms of market cap in the world. Bitcoin’s popularity has contributed significantly to the release of thousands of other cryptocurrencies, called “altcoins.” While the crypto market was originally hegemonic, today’s landscape features countless altcoins.Bitcoin ControversyBitcoin has been extremely controversial since its original launch. Given its mercurial nature, Bitcoin has been criticized for its use in illegal transactions and money laundering.As its impossible to trace, these attributes make Bitcoin the ideal vehicle for illicit behavior. Moreover, critics point to its high electricity consumption for mining, rampant price volatility, and thefts from exchanges. Bitcoin has been seen as a speculative bubble given its lack of oversight. The crypto has weathered multiple collapses and survived over a decade so far. Unlike its launch back in 2009, Bitcoin today is viewed far differently and is much more accepted by merchants and other entities.
Read this Term
, Monero obfuscates any information about the users’ identity and past transactions.

The IRS hired Chainalysis and Integra to develop tracing tools for Monero. To this date no tracing tools for Monero were reported.

Aside Monero, other privacy-focused cryptocurrencies are available such as Zcash. Monero uses stealth addresses, random addresses that are burned after a single transaction (a burner address) and a security ring for greater privacy.

Monero’s official twitter account responded to the upcoming US executive order:

monero

As Monero is not compliant with the proposed regulations (and it will never be), Monero may be delisted from various exchanges. Many are suggesting to immediately withdraw XMR from crypto exchanges and store them in XMR wallets.

Privacy coins may be the center of attention in US regulations. Ransomware attackers often ask for Monero. Due to the upcoming regulations, privacy coins spiked higher. XMR popularity may increase as many users wish to maintain their anonymity in the crypto landscape.

Monero initially broke higher on when the US executive order was signed. However, it is currently facing a large selloff. Monero trading volumes are estimated to be down by approximately -40%.

It is early to determine whether XMR selling is related to profit realization or investors abandoning to the cryptocurrency due to the upcoming regulations.

Zcash, another privacy-focused token is holding onto its gains as opposed to XMR. It may offer a greater case for investors pulling out of Monero rather than a swift profit realization.

Bitcoin Reaction to Upcoming Regulations

Bitcoin initially traded higher following the executive order. One the dust settled; corrective weakness was followed.

Bitcoin investors realized profits following the rally, which is well seen in the market as BTCUSD is back under $40,000.

btc liquidation

source: coinglass

Aside Bitcoin, ETH gas fees dropped significantly. The standard (26) swapping gas fees dropped below $10. Liquidity gas for ether is also relatively low.

ETH Gas is Falling

Since the OpenSea phishing hack trading volumes in the NFT marketplace dropped significantly. OpenSea began blocking users that are based in Iran from its platform. The move started as regulating digital assets is picking up pace in both the United States and Europe.

It is possible that due the decline in ETH marketplaces it had some impact on the reduction of gas fees.

eth gas fees

swapping fee, source: crypto.com

eth liquidity gas

liquidity fee, source: crypto.com

Bitcoin, Waves and Stellar

As long as the war between Russia and Ukraine continues Bitcoin may struggle to find stability. A monthly close below $37,000 may technically suggest further weakness is due.

Regulatory measures that may be introduced by the US, EU and most recently Dubai may not necessarily have a positive impact on cryptocurrencies over the medium term.

‘Harsh’ regulations may be met by resistance and greater volatility in crypto-related products.

Stellar and Waves cryptocurrencies have their own blockchain. Despite the heavy selling in Bitcoin, Ethereum and BNB they are both demonstrating greater resilience.

waves

source: WAVE/USD, tradingview

I will cautiously say that using an alternative blockchains to BSC and ETH and the protocols differentials may have their benefits based on the market reaction to BTC long liquidations.

Waves did gain some attraction on its shift to Practical Proof-of-Stake Sharding (PPOSS) and support Ethereum Virtual Machine (EVM). While some suggest that the bullish ‘wave’ is because the founder is Ukrainian (Sasha Ivanov)

Analyzing the various blockchain technologies may provide a better understanding of which blockchain technology is best adopted and more resilient to market volatility.

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